By L. Steven Emmert, Inside Business - Hampton Roads, January 29, 2007

On Jan. 12, the Supreme Court of Virginia handed down opinions in two cases that help to define the rights of condominium and homeowners’ associations. If you’re forming a condominium, or organizing a homeowners’ association, you should know about these decisions.

Kuznicki v. Mason – In this case, the court clarified that only the condo association can sue to prevent encroachments upon a given owner’s limited common elements; a unit owner cannot file suit to protect her own backyard. While that might seem counterintuitive to persons who are not accustomed to condominium law, it’s an inherent effect of the condominium form of property ownership.

In ordinary neighborhoods, each homeowner owns his own lot, and he’s the only one who can sue if he thinks his neighbor is starting to encroach over the property line. But property ownership is different once you declare a condominium. Aside from the units themselves, all other properties in and around the condos are called common elements. Those can be general common elements, such as sidewalks and recreation areas, which all unit owners have the right to use, or limited common elements, which are reserved for the exclusive use of a given unit owner.

The court’s ruling provides that a unit owner’s right to use a limited common element does not equal ownership of that area; it still belongs to the association. When one neighbor starts to encroach upon his neighbor’s limited common element, only the association can sue to stop the encroachment.

Westlake Properties v. Westlake Pointe Property Owners Association – In this ruling, the court confronts the opposite situation from the previous case. This was a suit by a homeowners’ association against the developer of a townhome community on Smith Mountain Lake. The developer negligently installed a septic system to serve the entire complex; that system failed when severe erosion, after a heavy rainfall, exposed and damaged the underground portion of the facility. The association sued to collect damages.

Here, the developer argued that since the septic lines were on property belonging to individual unit owners, the association did not have standing to sue; that is, it contended that the property owners themselves were the only ones with the right to file the lawsuit. Additionally, it pointed out that the association had agreed to distribute any recovery, pro rata, to the owners who had paid substantial assessments to install a replacement system. So in reality, the owners themselves were the real parties in interest.

But the court reached the same result here as in the condominium case; it finds that the association is the proper party to sue the developer for the sloppy installation, since it is the entity that owns the system itself, and has the obligation to maintain the lines.

The lesson of these cases – Any time you create a condominium or establish a homeowners’ association for a common-property development, some of the rights that might otherwise flow to the eventual purchaser will be retained by the association. If you’re declaring or developing a condominium or townhouse community, you need to keep in mind that not all of your buyers will fully understand the concept of common ownership, or that they are giving up more than just the obligation to mow the lawn when they buy a condo unit.

In these cases, the Supreme Court makes clear that the associations, and only the associations, have the right to sue to vindicate rights held in common by the various unit owners. That might seem particularly harsh in the first case discussed above, where the unit owner lost part of “his” backyard, and was told he had no right to go to court to stop it.

Finally, remember that the associations have not only the sole right, but also the responsibility to take these actions. If they fail to do so, they may find themselves confronted by angry unit owners, demanding relief. That right, at least, conveys with the unit.

L. Steven Emmert is chairman, Appellate Practice Subcommittee of the Virginia State Bar’s Litigation Section. His practice at Sykes, Bourdon, Ahern & Levy PC in Virginia Beach focuses on appellate advocacy in the state and federal courts. He authors the Web site “Virginia Appellate News & Analysis” at www.virginia-appeals.com.